Revenue Recognition

Recognition Method:

Billed

Billed + WIP

Recognition Method defines how and when revenue is recorded in your accounting books. It determines whether revenue from time and expenses is posted at the time of entry or only after invoicing. This setting can be overridden at the project level. The method you choose determines how time and expense entries affect your general ledger and financial reports.

CORE supports two revenue recognition methods:

• Billed
  In this method, revenue is recognized only when an invoice is created. No income is posted when time or expenses are entered. Instead, entries are recorded for reporting and billing purposes and affect the general ledger only at the time of billing. 
  Example: If you log 5 hours on June 10, but generate the invoice on June 20, the revenue will be recognized on June 20.
• Billed + WIP
  This method posts revenue as soon as billable time or expenses are entered, and reverses it when the invoice is generated. It provides an accurate view of earned revenue over time and is suitable for accrual-based revenue tracking.
  Example: If you log 5 hours on June 10, CORE records revenue to WIP and income accounts the same day. When invoiced on June 20, the earlier entries are reversed, and standard invoice income is recorded.
  
  Note: Enabling this method requires the Generate WIP Revenue rule to be turned on for applicable projects. You can use Batch Update from the Projects screen to enable this rule across multiple projects.

This option is only available when the revenue recognition method is set to Billed + WIP. It controls the visibility and selection of consultant-related accounts for revenue recognition.

When enabled, it allows you to view and select the following accounts:

• WIP Consultant (Balance Sheet account): This account is debited for the charge amount of billable vendor (consultant) expenses when entered, and credited when those expenses are invoiced.

• Consultant (Revenue account): This account is credited for the charge amount of billable consultant expenses when entered, and debited when those expenses are invoiced.

  Note: Enabling this option is optional and intended for companies that track consultant costs separately.

The accounts selected here determine where revenue recognition entries are reflected on the balance sheet. Only Asset or Liability accounts should be selected for reflecting revenue recognition entries on the balance sheet.
 

• WIP Labor: Debited for the billable value of time entries when employee time is entered. Credited when invoices are generated.
• WIP Expense: Debited for the billable amount of expense entries when entered. Credited when invoices are generated.
• WIP Consultant (optional): Debited for the billable amount of vendor (consultant) expenses when entered. Credited when invoices are generated.
  Note: Enable the Consultant Accounts toggle to display this field.
• Salaries Payable: Credited for the cost amount (Cost Rate × Hours) of billable time entries when employee time is entered. Debited when payroll journal entries are entered.

The accounts selected here determine how revenue from billable activities is tracked on the income statement. 

• Unbilled Labor:  Credited for the billable amount of time entries when employee time is entered, and debited when invoices are generated.
• Unbilled Expense:  Credited for the charge amount of billable expenses when entered, and debited when invoices are generated.
• Unbilled Consultant: Credited for the charge amount of billable consultant expenses when entered, and debited when invoices are generated.

The accounts selected below determine how payroll-related costs are tracked.

• Billable Payroll: Debited for the cost amount (Cost Rate × Hours) of billable time entries when employee time is entered, and credited when payroll journals are posted.
• Non-Billable Payroll: Debited for the cost amount (Cost Rate × Hours) of non-billable time entries when employee time is entered, and credited when payroll journals are posted.
• Payroll Variance: Credited if the actual amount paid to salaried employees is less than the cost rate applied in their time entries. Debited if the actual amount paid is greater than the cost rate applied.

When the setting Utilize Activity or Expense Item Configured Expense Accounts is enabled, Revenue Recognition uses the expense account defined on the activity or expense item instead of the default billable or non-billable payroll accounts. This allows time entries to post using activity-level expense accounts for more detailed cost allocation. If no expense account is defined on the activity or expense item, Revenue Recognition uses the expense account configured in the Revenue Recognition setup. This allows time entries to post using activity-level expense accounts while ensuring a consistent fallback when an item-level account is not configured.